Business

Starbucks to open 1,500 more cafes in the US

Sales at new Starbucks cafes are averaging about $1 million a year, exceeding the company’s target of $900,000.
Charles Rex Arbogast/Associated Press
Sales at new Starbucks cafes are averaging about $1 million a year, exceeding the company’s target of $900,000.

NEW YORK — Another Starbucks may soon pop up around the corner, with the world’s biggest coffee company planning to add at least 1,500 cafes in the United States over the next five years.

Starbucks said Wednesday that it plans to boost the number of locations in its biggest market by about 13 percent by 2017. In the broader Americas region, the company plans to add a total of 3,000 new cafes by that time.

Worldwide, the company says it will have more than 20,000 cafes by 2014, up from its current count of about 18,000. Much of that growth will come from China, which the company says will surpass Canada as its second-biggest market.

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Although Starbucks has been intensifying its growth overseas and building its packaged-goods business back at home, the majority of its revenue still comes from its more than 11,100 cafes in the United States.

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In an interview ahead of its investor day, chief executive Howard Schultz said the US expansion plans are based ‘‘on the current strength of our business’’

Just a few months ago, the company had predicted it would open just 1,000 new cafes in the country over the next five years.

The upbeat expansion plans mark a turnaround from Starbucks’ struggles during the recession. After hitting a rough patch, the company brought back Schultz as CEO in 2008 and embarked on massive restructuring effort that included closing 10 percent of its US stores.

Cliff Burrows, who heads Starbucks’ domestic business, said the problem wasn’t that Starbucks was oversaturated, but that the company hadn’t been careful about its store openings. In the years leading up to the downturn, the company was opening well over 1,000 stores a year. That led to cafes in locations where signs or traffic might not be optimal.

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Burrows said Starbucks has gotten more sophisticated, and said the cafes opened in recent years are among the company’s best performers.

Sales at new cafes are averaging about $1 million a year, for example, above the company’s target of $900,000. It costs about $450,000 to build a new cafe.

Since Starbucks already has a broad footprint, the company’s expansion is intended to deepen its presence with additional stores in markets across the country, said Troy Alstead, Starbucks’ chief financial officer.